If you’ve read this blog for any period of time you’ll probably know I’m not a huge fan of the big credit card companies. They tend to toe the line between what’s legal and illegal and in the end it’s always the consumer who gets hurt. My feeling on the topic is that in most cases you’re better off not having a credit card. It’s hard for the companies to do you wrong when you aren’t giving them your business!

Even though I’m not a huge fan of the credit cards, I still hold on to one credit card mainly for the cash rewards program. I know, I know – Dave Ramsey would shoot me if he read that, but I only use the credit card on large purchases when I have the cash already sitting in the bank account ready to pay it off. As soon as it hits the card, I pay it off. I never pay interest.

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Because of using the rewards credit card I end up getting $50-100 back in cash rewards every year. It’s not much, but it’s enough to make it worth my while. But still, I really don’t want to use a credit card if I don’t have to. Before it seemed like I didn’t really have any other options because not many checking accounts offered a rewards program. Now there is one that does.

Perkstreet Financial Free Online Checking

Perkstreet Financial has burst onto the scene with a rewards checking account option where you can get 2% cash back for the first 3 months, and if your balance is over $5000, 2% after that! Balances under $5000 earn 1% cash back. What all this means to me is that there is really no reason for that cash back credit card anymore when you can get the same benefits from a debit card!

Some of the Perkstreet Checking account’s benefits include:

No Cap On the Amount of Perks You Can Earn

Nation’s Largest Surcharge-Free ATM Network

No Minimum Balance Requirement

No Monthly Fees When You Use Your Account

Sign-Up In Just 5 Minutes

Free Online Banking and Bill Pay

No Need to Worry, Deposits are FDIC Insured Up to $250,000 and Protected from Fraud by the Visa Zero Liability Policy

PerkStreet Financial? Visa® Debit Card gives you 2% cash back

Super fast live phone service, 24/7

Signing Up For Perkstreet

Signing up for Perkstreet is a pretty simple process that only takes 5 minutes according to their site. It’s a four step process – selection (what type of rewards and account you want), identification, review of your information, and funding via credit or debit card.

Some of the information you’ll need to open your account includes:

Social Security Number

Personal information

Driver’s license

Debit or credit card to make the initial $25 deposit.

According to others who have opened accounts you won’t get a hard credit pull on your credit report when you open an account, unless you open a “plus” account – with overdraft protection. I’m not sure if this is true or not, so be advised.

Conclusion

Some of the things that stand out about the account to me include the high number of free ATMs you can use when you have the account (over 37,000 of them in the STARsf® surcharge-free network), no monthly fees as long as you use the account, free bill pay, and the protection of FDIC insurance of up to $250,000 on your account. So you don’t have to worry about your money being safe. On top of that now you don’t need to get a credit card to have a rewards account! Bye, bye credit cards!

The only down side that I can see to the account is that it isn’t an interest bearing account. While that may not be great, for me I’ve already got a high yield savings account that I use for my larger emergency fund. If I chose to open an account I could use the Perkstreet account as a place for regular monthly spending – probably earning more cash back than I would have gained in interest anyway.

If you’re looking for an account where you can earn rewards for spending that you’re doing anyway, but you don’t want a credit card, I’d recommend checking out Perkstreet.

Comments

Still a debit card though.. the cashback is nice, but the thing I like most about my Amex charge (not credit, grin) card is the protection I get for unauthorized purchases, products that fail prematurely, etc.

Debit = you get your money back after the investigation is completed, where with a credit/charge card you never pay the money unless your claim is denied. Debit also makes “real money” unavailable when companies put a hold on it, etc..

This sounds great! I’m going to take a look at this next week and may be kissing Bank of America goodbye! I’ll have to refer back to your other post for the process so there are no surprises!

@Nate: Because debit makes “real” money unavailable is the ONLY reason I still have one credit card. It is used strictly for hotel holds and rental cars….even though I don’t pay with them. I don’t like the idea of money tied up for “incidentals” I didn’t even use well after I’ve left.

Cash back and rewards can be dangerous – you’re correct – so you have to make sure you’re only using it for things you would buy anyway.. I wrote about the dangers of rewards cards a while back, and talked about how they can cause you to overspend.

Sorry if I missed it in the article, but does PerkStreet offer a savings rate in addition to the cash back? If not, isn’t your money sitting there earning nothing except for what you earn as a cash back? If that is the case, it would make sense to continue to use your credit card cash back program and park your money in an on-line savings account earning 1.1% (hopefully more someday soon).

No it isn’t an interest earning account. Because of that I probably wouldn’t use this account for a large emergency fund or goal savings account. I’d only transfer enough money over to this account every month to take care of monthly bills – and get the cash back. For emergency funds and larger balances I’d put it in a high yield savings account.

Hmmm.
It seems like PerkStreet has an opposite reward compared to most banks. They reward you for spending money in your account (cash back), but they don’t reward you for saving money (interest).
I’d rather have the insentive to save not spend.

But the thing is you HAVE to spend every month anyway if you have a mortgage, food, utilities, etc. You may as well make a bit of cash back when you pay those bills. I would never suggest this account as a replacement for a high yield savings account or anything like that. I’d use it in conjunction with a high yield savings – for your regular monthly spending. Along those lines I believe Perkstreet will also be offering a high yield savings account at some point in the near future. In the meantime check out the “bank rates” link above for some high yield savings account options.

@Craig Ford and @ Bible Debt
While other banks pay interest on checking account balances, most Americans would earn more money if they received 1% back on the money they typically spend.

Let’s say you had the choice between earning 1.1% interest or cash back based on spend:

You would have to park nearly $16,400 in your checking account to earn $180 in annual interest. We offer 2% cash back for 6 months and 1% thereafter. So with us, you’d earn $180 in your first year just by spending $230 each week (or $12,000 each year) on bills and other normal expenses. Plus, there’s no minimum balance requirement with PerkStreet.

It’s also important to note that most banks offer well below the 1.1% interest that Bible Debt references on checking accounts (ING’s Electric Orange account pays just .25% interest and Ally pays just .50% interest for balances below $15k).

The best thing to do is to park your money in a high interest savings account (which typically pay much better interest rates than checking accounts) and to spend your money with PerkStreet. By the way, we plan to introduce a rewards savings account in late 2010.

There are several problems with this bank, so I would warn potential customers to be aware of the fine print. Although PerkStreet’s website has the appearance of being clear about their policies, I found that not to be the case. These “fine print” policies seem designed to (1) make it difficult to move money out of the account, and (2) to limit the cashback that you can earn. Below are examples.

(1) They have a limit of $1500 on incoming online transfers in an entire *month*! They don’t tell you about this anywhere except when you actually try to move money into your account. When I called them about it, they said that they have this restriction for new customers and I was still in my first month. After a couple more calls, I realized that they will increase this limit to $2500 after six months.

Stated reason: Security.
Suspected motive: To limit the amount of money you can spend to get cashback.

(2) They have a limit of $500 on outgoing online transfers. So, say you move $5000 into your account to get 2% cashback. You are stuck with that money with them for the rest of the month (unless you adopt a slower paper check route).

(3) They have a limit of $1500 on daily expenses and explicitly say on their website that it can be waived simply by making a phone call. I had to book two one-way international flight tickets that cost a total of over $1500. I booked these and called them to waive the limit. They refused to do so because I was still in my first month. There is no notice about waivers not being allowed in the first month anywhere. As a result, I have to now spend much more money re-booking that ticket just because PerkStreet does not allow me to spend my own money.

Stated reason: Security for new customers. They claim that all banks have spending limits on debit cards. Really? Bank of America did not.

Suspected motive: Limiting spending => limiting cashback.

(4) When I tried to circumvent the limitation in (1) above to move more money into my account using FedEx, there was another surprise! The first FedEx check takes not 1 day as stated, but about 9 days for some reason. Again, some vague security reason that is incomprehensible to rational beings is given as an explanation.

Bottomline: It is not easy to get much cashback because of their restrictive policies on what you can do with your money. And they make it harder to move money out of the account while not giving any interest on it. As for the 5% cashback, they are on such specific and tiny items that I have never been able to get 5% cashback so far.

I’m the COO at PerkStreet. I’m sorry for the trouble you’ve had with your account- each of the items you’ve encountered are efforts to eliminate fraud, not to limit the amount you can earn. We’re continuing to work with our banking services partner to reduce the friction felt by customers without increasing the amount of fraud. I’d appreciate the opportunity to chat with you about how this can be better handled by customer service and use it as an opportunity to better educate our team. If you will drop me a note to jhenrichs -at- perkstreet.com, I’d appreciate your time.

As you noted in #1 / #2, the limits change as our relationship with you grows. One thing you can do to get money into your account more quickly is to initiate the transfer from your existing institution where the fact that you own the account is assured through possession of the username and password of that account.

For the daily limits you mention in #3, many banks (including BoA) have limits to prevent accounts from getting cleaned out. You can see how consistent this is across banks: http://bit.ly/C3GCt and it is an area we are working to innovate.

On your last point, the first time a check is received it is held until the funds clear before they are made available.

I hope this helps clarify the “why” things happened although it doesn’t completely alleviate the pain of the “what” happens as banks try to prevent fraud.

#1 and #2 are not revealed to customers right until they try to transfer money. This is misleading customers.

There is no justification for #3. FYI, BoA lets me use my debit card for several thousand dollars. In fact, I have never run into a limit. Moreover, PerkStreet’s security explanation makes no sense. I am asked to verify my secret questions, address, date of birth, social security number, and the money is right there in my account and I am calling to please let the transaction go through: ***to please let me use my money***. But no, PerkStreet will not let me do so in order to prevent fraud? Huh? I beg them to let it go through this one time coz I will have to pay more for tickets otherwise, but PerkStreet will not relent. To prevent fraud! I can put up with this stuff if I am at least told of the restrictions beforehand. The website as well as the phone representative told me that I just had to call in to waive the limit, but when I did call, I was told that the waiver is not guaranteed but will be addressed on a case-by-case basis, and in my case, they can not waive the limit. Sorry!

Same thing for online transfers. I have patiently verified my external bank accounts by verifying the two small deposits correctly and when I try to move money out, WHAM! Surprisingly, I can not move more than $500 per month! I can’t imagine what fraud PerkStreet is trying to prevent by disallowing transfers between verified accounts with the same home address. I have three other bank accounts and none of them have such ridiculous limits.

At this point, I don’t care about the security explanation. As far as I am concerned, PerkStreet makes it very difficult for me to (a) spend my own money or (b) to deposit my money into my account, or (c) to transfer my money from my account. The cashback is not worth it if someday you are slapped with a late fee or lose out on a good deal simply because PerkStreet has decided you have exceeded your spending limit or your transfer limit.

AV- I understand and share your frustration both as a consumer and as an entrepreneur trying to build a better way to bank in a world where the financial infrastructure of the US banking system creates challenges as well as opportunities that are used by fraudsters that as consumers we all end up paying for in the form of increased costs.

To address your points directly:
Spend limit: there is not benefit to us to limit your spending as we make money based on the interchange. The only reason to do so is from a fraud management perspective and many banks, including BoA, have used daily limits. BankRate talks about it: http://bit.ly/dxzMtW In 2008 POS/ATM fraud topped $788M. We set our limits and clearly disclose them as well as offer customers the ability to call in and request an override. As a customer with us less than 30 days and with little account history, the representative wasn’t in position to judge whether you were a legitimate customer or someone using AVs identity to steal his or someone else money.

On the ACH limits, losses in the industry for ACH fraud are astronomical as criminals can use the antiquated system and the fact that many aspects don’t run in real time to exploit both institutions and individuals. I was hit with the limitations last week myself when linking a donation account I’d set up on Google Checkout for a friend that lost his home with his CITI account. It has taken 4 days to do the trial deposits and we’re not done. If the resources of Google can’t solve it, you know it is an issue. Recognizing that it isn’t easy to transfer money in during the “get to know you period” we offer the 2% regardless of balance and encourage customers to do things like start the ACH process as soon as possible, set up direct deposit or go to the institutions with the holding relationship to push money to us. And while you want full disclosure of what the limits are and how they change, we can’t publish that without basically giving a fraudster the road map of how to get through our risk matrix.

For PerkStreet we take protecting our customers savings and the customer experience very seriously and do our best to manage the balance between the two. There is definitely room for more innovation in this area and we are working hard on it. If we can’t manage fraud losses, however, we can’t afford 2% back and that’s part of the reason why you don’t get anything back from BoA

Wow, I was seriously considering this bank, but after reading all the limits on accessing your money, I’m not going with them. I use bill pay to pay my bills, we rely on debit cards to do everything. What if we pay bills, buy groceries and fuel up all in one day and it exceeds the holy “limit”? Gee whiz guys.

PERKSTREET is the biggest scam I have ever encountered. While the spending and transfer limits have always bugged me, my recent situation takes the cake. I made an $1800 CASH deposit 5 DAYS ago into my PERKSTREET account via MoneyGram. MoneyGram told me it was a 10 minute transaction, I am at the end of day 5 and still no credit to my account. I have called no less than 5 times in the last 3 days trying to figure out what is going on, and their customer service reps (who never seem to have an articulate answer for anything and simply quote “that’s the policy”) have been completely dismissive and in fact, said they show no deposit and have no idea what I am talking about. When I asked to speak to a manager, they (again quoting policy) said it would be 24 hours until someone could talk to me. I even got MoneyGram and PERKSTREET on a 3-way call today to verify with my reference number that the deposit was made and still got no resolution. In what universe does it take at least 6 DAYS (here’s to hoping its resolved tomorrow) for a cash deposit to appear in my account? Especially when it was an automated transaction between MoneyGram and PERKSTREET? This bank is completely bunk. STAY AWAY!

Can’t say I’ve ever had a transaction take that long, although i’ve also never done a Moneygram deposit – always a direct funds transfer from an existing account, or via a mailed in deposit. Hopefully they’ll get it figured out for you. Normally I’ve found their support to be pretty helpful. I just had a situation today where they were able to tell me how to get around their $1500 funds transfer rule – by mailing in a check via next day air/UPS at no extra cost to me.. In any event, best of luck, hope you get it figured out.

Rachel – I’m the COO at PerkStreet and want to apologize that representative didn’t provide a clearer explanation. MoneyGram deposits have next business day availability so it is unclear to me why this took so long. Can you drop a note at help-at-perkstreet with the personal details (like your last name / date you and location you made the deposit / time and date you called) so we can investigate and make sure all of our representatives are giving the clearest answers. Again, my apologies and we will make this right – regard, Jason

Just did a little googling. You’re right you’re not the only one. There are about two others.

Perkstreet is clear that deposits can take a few days & it sounds like Jason H. is more than eager to solve your problem. Don’t live by the skin of your teeth and a slow deposit won’t bite you.

All I know is I’ve had zero problems in the year I’ve been using Perkstreet and the couple of times I’ve called with questions the support was quick and helpful. We haven’t done anything to adjust our lifestyles around an online bank, we’ve never hit the spending limit.

For the love of Pete if you don’t like ’em don’t use ’em. I personally would stick with them for the fact that they are going to extra lengths to stop fraud if nothing else. Who do you think the cost of fraud gets passed down to?

Scott,
I am closing our account, thank you for the sage advice. You are being awfully judgmental about a situation in which you know nothing. I don’t know anyone who would be ok with $1800 cash vanishing into thin air, only to have customer service reps repeatedly tell me there was no such deposit. If you have more than one child in day care, you are going to exceed their spending limit. If you would like to give a cash gift to your grandmother on her birthday, you are going to exceed their withdrawal limit. Both of these things have happened to me. I personally do not like to be told that I cannot have access to my own money under the guise of “FRAUD PROTECTION”. No other bank I have had accounts with has ever treated me this way-and how do they do it?

You are correct, “Jason H” did help a thousand times more than the people in their call center. My thoughts on that is they need better training.

And for you sir, I would say I am glad you are so in love with your bank. But you experience does not in any way diminish mine.

Rachel – just to clarify, the $1800 did not vanish into thin air; you deposited it at MoneyGram and it quickly showed as a pending transaction in our system. When we received the funds from MoneyGram they were made available to you. We try to make it as a clear as possible that they can take up to 4 business days (including highlighting this information on the MoneyGram deposit instructions). We understand that details like this can be easy to miss which is why we are always working on how we communicate this important information. As you pointed out, there are almost certainly things our reps could have done better which is why we dissect events like these and review as a group. As to the spending limits, these are fairly standard across the industry and easily raised with a quick phone call.

It sounds like a branch bank is a better fit for you. While we hate to see a customer go, we recognize we aren’t the right fit for everyone. Thank you for taking the time to communicate and allow us to respond in both public and private forums. ~Jason

I wanted to clarify one point (as directed by our head of customer experience) – the funds through MoneyGram are available the next business day from when we receive the file from MoneyGram. It can take 2-3 business days to receive the file so we state explicitly on the MoneyGram deposit form, it can take up to 4 business for funds to be available. We try to make this as clear as possible up front to avoid situations like this and we regret when the policies that are needed to safeguard accounts cause our customers pain. ~Jason

Upon attempting to close my account after I found out that you had to have $5,000 to get the 2% cash back, I was told by a customer representative that I should leave my account open so I could return to it and use the funds if I ever wanted to in the future. 6 months later I realized I would not be using it, called back to cancel the account, and was told I only had $7 left in the account due to an “inactivity fee” of $4.50 a month. After informing Perkstreet what I had been told by the previous customer service representative, I asked for each inactivity fee to be refunded but they refused saying that the $4.50 fee was in the mice type disclosure statement and would be in full force no matter what I was told by a representative. Go with Perkstreet if you want no customer service. Go with a local credit union if you want an actual human to interact with and be understanding.

I am sorry to hear that you’re dissatisfied with the level of customer service received and with our policies. We strive to be clear about all potential fees at PerkStreet and — as we only make money when our customers make money — also do our best to educate on the rewards program structure. Transparency is of utmost importance to us. For the first 90 days of your — and all new accounts now, and in August on 2011 — you earn 2% cash back on non-PIN purchases regardless of balance. Thereafter, the 1% and 2% distinction per $5,000 balance does take affect. 5% monthly PowerPerks apply regardless of balance for the duration of the account. To the point of an inactivity fee, as it costs us money to hold accounts on the books while offering free ACH transfers, fee BillPay, and a network of 42K+ free ATMs, we ask that you engage with the account just one time per month, any transaction type, any dollar amount. For community reference, here is a list of all potential fees at PerkStreet: http://www.perkstreet.com/fees… As mentioned on Facebook and on our blog comments section, we’d love to discuss account specifics with you at help@perkstreet.com and hope to right the ship as it regards your experience with Customer Service.

That means you had about $34 in there. If this is a huge lose, you have greater concerns than which bank you should use.

I’ve been using Perkstreet for just over a year and have received $850 cash back just for banking with them. I have never had any problems with the bank or customer service and I don’t think it is fair for you to run off potential customers due to your poor reading/financial abilities. It is made clear in the beginning that the 2% cash back is introductory and will revert to 1% unless the balance is kept above $5,000. That shouldn’t be impossible for an adult to manage, not to mention that it is just plain wise to keep an emergency fund available.

Check out Dave Ramsey so that the tiny things in life aren’t hurricanes.

So I’m guessing the fact that I was encouraged by Perkstreet customer service to leave an account open so that I could come back and use it when I’m ready without mentioning I would be hit with a $4.50 monthly inactivity fee is ok? I’ve found that if you reach someone at Perkstreet’s home office they are very helpful, but their (800) # call line is not their home office. With my company, we accept responsibility for what our customer service reps tell our customers. Why doesn’t Perkstreet?

I love the crazy Ramseyites :-) I like Dave Ramsey but don’t go around screaming at anyone who disagrees with one of the companies he advertises. Comments are a good way to give people a look at the good and the bad. No reason to attack people if they’ve had a bad experience and want to comment about it.

Wanted to add that Perkstreet finally decided to refund the inactivity fees…just wish I could have taken care of the problem the first time around. Thanks Perkstreet for finally listening to my complaints…

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